By COLIN HICKEY
Staff Writer Thursday, February 01, 2007

enlarge Staff photo by David Leaming

Lohmann Animal Health International Chief Executive Officer Dave Zacek holds a container of custom-made vaccine for chicken breeders inside the final-product cooler at the Winslow company. Zacek worked at the company for 11Ú2 years before a federal virus-smuggling investigation resulted in jail time and fines for the company and some top executives.

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The China Road biotechnology firm, which generates $24 million in annual sales, already has added five jobs and expects to add 25 more before year's end, Chief Executive Officer Dave Zacek said.

At the same time, work crews are at the site, pouring the foundation of an addition to the main building for storage, packing, labeling and shipping purposes that is part of a more than $1.5 million construction project.

Meanwhile, sales, which plummeted after the smuggling case became public, are headed up again.

"We are gaining market share," Zacek said, "and we would like to put the past in the past and look squarely ahead."

Zacek said none of the four high-level executives who received jail sentences and fines ranging from $5,000 to $30,000 -- three of whom lived in central Maine -- works for the company any longer.

The illegal activity took place in 1998 and involved smuggling a chicken virus into the United States from Saudi Arabia so that the Winslow company, then known as Maine Biological Laboratories, could create a vaccine from the virus.

Zacek, 63, joined Maine Biological Laboratories -- the name changed to Lohmann Animal Health International a year ago last month -- in 2000, two years after the crimes occurred.

Zacek said he wants Lohmann, the world's fourth largest producer of avian vaccines, to be seen as a thriving local company with nothing to hide.

"It is my motivation over the next two or three years to make very public our successes and our growth," he said.

That growth, he said, is the result of a decision to consolidate Lohmann Animal Health International's operations in the United States at one location.

Zacek said parent corporation The PHW Group, which is based in Germany, is closing its manufacturing plant and packaging/distribution center in Vineland, N.J., and transferring those functions to Winslow.

That will eliminate 60 jobs in New Jersey, Zacek said, and boost the workforce here from 70 to 100 employees by year's end. Lohmann currently has an annual payroll of $6 million, according to Zacek.

The PHW Group hired Zacek to manage the consolidation.

Zacek said the move made sense on both ends of the equation. The New Jersey operation, he said, had three major liabilities:

n Restrictive zoning that limited expansion possibilities;

n Old facilities that drove up operation costs;

n A highly competitive labor market -- primarily the result of competing with pharmaceutical companies for employees.

Maine offered a much more appealing business environment, Zacek said.

"We like the labor supply. We like the work ethic," he said. "And we've had an excellent experience here with the workforce."

Zacek said the consolidation will reduce his company's operating costs and create greater efficiencies in regard to packing, labeling and shipping of products.

The company's product is vaccine to prevent diseases in chickens, turkeys, pigeons and geese.

Lohmann produces 80 distinct vaccines, which it sends to customers in 41 countries, Zacek said.

Zacek said he has redesigned the company's protocols and procedures so that multiple checks are in place at every stage of the manufacturing, packing, labeling and shipping processes.

The U.S. Department of Agriculture -- the regulatory agency for the avian vaccine industry -- sent a team to inspect Lohmann's operation from Jan. 18 to 25, according to Zacek.

Zacek said the visit was routine, part of USDA's duty to ensure avian vaccine companies are in compliance with regulations.

Jim Rogers, a U.S. Department of Agriculture spokesman, confirmed this.

Zacek said the inspection went well. He said the team raised only minor concerns and most of them were resolved immediately.

"We have stiffened up our (quality assurance) controls over all the processes," he said. "There is only one way to do it: the legal way -- USDA compliant."

Rogers said the inspection team has not yet finished its report, but said if anything "insane" had been discovered, USDA would have taken action through various enforcement agencies.

"If the vaccine was not good, we certainly would say so," he said.

But Rogers said inspection teams do not rate the companies they evaluate.

"We don't say companies are good or bad," he said. "We just say whether they are licensed and let people figure out the rest themselves."

Colin Hickey -- 861-9205

chickey@centralmaine.com